Medicare Trends

First a word about the rising cost of retiree healthcare…

• The average 66-year-old couple is expected to spend nearly 60% of their Social Security income on medical bills, according to a recent survey

• The typical 45-year-old couple’s health care tab will total 116% of lifetime Social Security benefits

Introduction

• Medicare Advantage (MA) is a program of competing private health plans.

• For the vast majority of senior citizens, it is the only viable alternative to enrollment in traditional Medicare.

• For Members of Congress, its record can provide valuable lessons for comprehensive Healthcare reform

• MA is an increasingly attractive option for millions of senior and disabled Americans because it offers comprehensive coverage, and, typically, a more generous benefits package than traditional Medicare.

• MA plans must put a cap on beneficiaries’ out-of-pocket costs.

• Patients are provided with a variety of plans and a broad array of doctors, hospitals, and other medical professionals;

• MA plans have also made pioneering changes in care delivery, such as care coordination and case management.

• Today, the program has 15.7 million enrollees, almost 30 percent of the entire Medicare population.

What are we going to talk about?

• The Medicare Population

• ACA and Medicare

• Future of Medicare Advantage

• Federal Challenges

• Managed Care

• MACRA For Insurance Brokers

• Add your third bullet point here

The Medicare Population

Market Trends

• UnitedHealthcare and Humana together account for 41 percent of enrollment in 2017

• 97% of all MA-PD enrollees have access to a zero premium plan

• only about half (52%) are enrolled in such a plan

• 10 percent with premiums of $100 per month or more.

• 66 percent of Medicare Advantage enrollees are in plans with 4 or more stars

ACA And Medicare

• ACA Is still the law of the land

• Medicare coverage is protected. Medicare isn’t part of the Health Insurance Marketplace, so your clients don't have to replace their Medicare coverage with Marketplace coverage.

• More preventive services, for less. Medicare now covers certain preventive services, like mammograms or colonoscopies, without charging for the Part B coinsurance or deductible. Your clients also can get a free yearly "Wellness" visit.

• Cost savings on brand-name drugs. A 60% discount when buying Part D-covered brand-name prescription drugs in the donut hole

• The donut hole will be closed completely by 2020

• Doctors gets more support. With new initiatives to support care coordination, providers may get additional resources to make sure that treatments are consistent.

• The health care law ensures the protection of Medicare for years to come. The life of the Medicare Trust fund will be extended to at least 2029—a 12-year extension due to reductions in waste, fraud and abuse, and Medicare costs

ACA Cuts

• Medicare Advantage plans receive payments from Medicare to provide all Medicare-covered benefits to enrollees.

• The Medicare Payment Advisory Commission (MedPAC) reports that Medicare payments to private health plans in 2010 were between 9 percent and 13 percent higher, on average, than local fee-for-service costs.

• The 2010 health reform law gradually phased down Medicare payments to plans, to bring payments closer to the average costs of Medicare beneficiaries, by county

MA enrollees

Annual MAplan costs

per enrollee

AnnualtraditionalMedicarecosts per

beneficiary

MA plan costsper enrollee as

apercent of traditional

Medicare costs per

beneficiary(B/C)

Total MA plan costs

relative to traditional

Medicare costs((B-C)*A)

(in millions)

Nationwide 8,829,576 $9,370 $9,413 100% -$378

Urban 8,422,171 9,344 9,452 99 -911

Rural 407,405 9,915 8,607 115 533

T

The Death of Medicare Advantage??

• Enrollment Growth. Since the ACA was passed in 2010, Medicare Advantage enrollment has grown 71 percent.

• Total Medicare Advantage enrollment grew by about 1.4 million beneficiaries, or 8 percent, between 2016 and 2017

• Medicare Advantage enrollment increased in all states but one in 2017, In eight states AK, AL, DE, MD, NH, NJ, VT, and WY enrollment increased by 20 percent or more

• Medicare Advantage enrollment is projected to continue to grow over the next decade, rising to 41 percent of all Medicare beneficiaries by 2027

The Insurance Companies

• 4 biggest US Insurers are losing money on the ACA

• Losses expected for each into hundreds of millions of dollars

• No way to force insurers to participate in rural markets

• ¼ of all counties will have only one plan option

• Uncertainty and Risk…

• “In the Affordable Care Act marketplace, there has been an enormous amount of churning — people dropping out, going into other plans — so it’s been very difficult for insurers to predict spending, By contrast, Medicare Advantage is a very predictable business” -Prof. Dana Goldman, a health economist at the University of Southern California.

The Insurance Companies

• Since 2006, Medicare has paid plans under a bidding process. Plans submit “bids” based on estimated costs per enrollee for services covered under Medicare Parts A and B

• The bids are compared to benchmark amounts

• The benchmarks are the maximum amount Medicare will pay a plan in a given area

• If a plan’s bid is higher than the benchmark, enrollees pay the difference between the benchmark and the bid in the form of a monthly premium, in addition to the Medicare Part B premium.

• If the bid is lower than the benchmark, the plan and Medicare split the difference between the bid and the benchmark; the plan’s share is known as a “rebate,” which must be used to provide supplemental benefits to enrollees.

• “Even with all the cutbacks in the Affordable Care Act, there is still a decent opportunity for insurance companies to make a profit in the Medicare Advantage program,” said the marketplace under the Affordable Care Act will calm down over time but may not ever be as stable and predictable as Medicare Advantage.”

• -Richard S. Foster, the former chief actuary of the Medicare program.

Republicans are signaling they want to overhaul Medicare, but it’s very unlikely they would do anything to undermine the Advantage program.

House Speaker Paul Ryan favors turning Medicare into a premium support system. Beneficiaries would receive vouchers to purchase a private plan or traditional Medicare coverage.

“This model would be gasoline on the fire” of Advantage enrollment” –John Gorman (Former CMS Official and now a healthcare consultant in Washington

Federal Challenges

Managing Care

• The United States spends more money per person on healthcare than any other country in the world

• Paying more doesn’t get you more…In fact, not only does the U.S. fare worse in terms of infant mortality and life expectancy than other developed nations, it also tops the list for deaths that are considered preventable with timely and appropriate treatment.

• a hospital stay or common diagnostic tests, like MRIs, cost many times more in the U.S. than in countries like Germany or Japan.

• Just 5% of the population accounts for nearly half of the spending on healthcare

• 20% of the population accounts for 4/5 of total spending

• The cost for these patients skyrockets when its not properly coordinated

Managing Care Cont…

• One of five elderly patients discharged from hospitals in the United States ends up being readmitted within 30 days, costing Medicare alone upwards of $17 billion each year

• Research shows that 75 percent of Medicare hospital readmissions (4.4 million patients) may be preventable, suggesting potential savings of up to $12 billion in annual Medicare spending.

• Research shows that adverse medication events are responsible for more than 88 percent of emergency hospital admissions among elderly patients, two thirds of which are readmissions

Is Managed Care Better Care??

• There are good managed care organizations and bad ones

• A survey of over 3000 Medicare patients found that 87% would recommend their HMO for standard care

• A analysis of the literature on managed care performance cites six studies which show that HMO plan enrollees receive more preventive tests, examinations, and health promotion services

• 14 out of 20 studies that measured quality of care found that patients showed better results compared with fee for service

Most studies suggest that managed care may be most effective in preventing over-treatment

MACRA

How Are Doctors Paid?

• Fee for Service – Fee for every service performed

• Capitation – Flat fee every month (Per Patient per month) RISK/REWARD

• Pay for Performance –Bonus payments tied to quality of care RISK/REWARD

Group A

Group B

Group C

MACRA- Medicare Access and CHIP Reauthorization Act of 2015

• Repeals the sustainable Growth Rate Formula (Threatened Part B Physicians with payment cliff for 13 years)

• Providers are eligible if they participate in an advanced payment model or if they bill Medicare more than $30,000 and provide care for more than 100 Medicare patients a year

• Providers can choose how they want to participate

• 2 Tracks to choose from

MIPS

• MIPS replaces current EHR incentive programs, physician quality reporting system, and Value Modifier Program

• MIPS comprises 4 performance categories used to score each eligible clinician

❖ Quality (50%)

❖ Resource Use (10%)

❖ Advancing care of information (25%)

❖ Clinical Practice improvement activities (15%)

❖ Whether a MIPS eligible clinicians composite performance exceeds, meets, or falls short of the threshold set by CMS determines a positive, negative, or neutral payment adjustment ( 4% in 2019, 5% 2020, 7% 2021, and 9% 2022 and beyond

Alternative Payment Models

• Provers exempt from MIPS

• Providers will receive a lump sum payment from Medicare in the amount equal to 5% of last year’s fee for service payments

• As few as 5% of all providers will qualify for payment under current alternative payment models

Alternative Payment Models

• The Centers for Medicare & Medicaid Services (CMS) will provide a list of care models each year that qualify for Advanced APM incentive payments. In 2017, the following models are Advanced APMs:

• Comprehensive ESRD Care (CEC) – Two-Sided Risk

• Comprehensive Primary Care Plus (CPC+)

• Next Generation ACO Model

• Shared Savings Program – Track 2

• Shared Savings Program – Track 3

• Oncology Care Model (OCM) – Two-Sided Risk

• Comprehensive Care for Joint Replacement (CJR) Payment Model (Track 1-CEHRT)

• Vermont Medicare ACO Initiative (as part of the Vermont All-Payer ACO Model)

Medicare Advantage as an APM

• Medicare Advantage will qualify as an advanced payment model in 2021

• Providers who are struggling under MIPS will have strong incentive to convert current fee for service patients to Medicare Advantage in order to qualify for this bonus

• Healthcare groups -- including the American Medical Association, the Medical Group Management Association and the American College of Surgeons sent a letter to CMS Administrator Seema Verma to press CMS to begin treating Medicare Advantage as an APM as early as 2019

Conclusion

• Medicare Advantage enrollment continues to grow across the Country

• Current federal challenges to the ACA don’t directly impact Medicare

• Medicare Advantage and Managed Care could provide a blue print to the future of federal healthcare reform

• Recent Federal legislation like MACRA seems to support the trend towards a more managed and risk bearing system